This invention relates to providing an improved system which allows financial institutions such as banks to clear checks more efficiently. More particularly, it relates to providing a system which transmits brief electronic data rather than physical checks or check images to facilitate a check clearing process.
In the past, deposited checks have been cleared through processes involving the physical transfer or shipping of checks; and, more recently, as discussed below, transfer of check images. For example, in the past physical checks have been shipped from location to location (e.g., a bank in California to the Federal Reserve to a bank in Florida) for processing. Shipping physical checks can take significant time (e.g., days) and, considering that billions of checks are processed each year, the costs of shipping physical checks can add up significantly.
Transmitting electronic data rather than physical checks can significantly improve the efficiency of clearing checks by lowering transaction costs and increasing the speed of processing (since electronic data can be sent from location to location for processing virtually instantly). Given the volume of transactions involved in the United States and throughout the world, it would be advantageous to have a process and system as efficient as possible, which process minimizes exchange expenses, float expenses, and transportation expenses. Further, for systems involving the electronic transfer of data, it would be advantageous to have a process that minimizes bandwidth and electronic transmission costs. Even further, it would be beneficial to have a standardized process, system and data exchange format for all financial institutions.
Routing check images electronically through a check clearing process (as in Check 21 systems) along traditional routes, although an improvement over transfer of physical checks, is still not an ideal solution. Check images require significant transmission bandwidth to transmit images at each step of the clearing process (relative to the bandwidth required, for example, to transmit MICR line data as preferred herein). And it also requires significant computer memory to store the check images at each step of the clearing process (relative to the memory required for MICR line data). Further, there are problems with image exchange standards resulting in inter-operability problems between banks and other involved entities.